Battle for Bill Pay 2.0 Will Decide the Winners and Losers in Banking
While banks ignored bill payment as little more than a basic utility feature, fintechs were busy transforming it into a Trojan Horse used to acquire and engage customers. The numbers reveal a sharp disconnect: nearly 75% of banking customers use automatic bill pay, but only 15% do so through their bank's platform. Here's what comes next.
By Mark. B Egan
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For years, banks and credit unions treated bill payment as a utility — something they built once, tucked into their app or website, and forgot. But while traditional bill pay was stagnating, fintechs were reimagining it as a gateway to engagement and a strategic driver of growth. Now, their success — and their growing competition for customer primacy — is prompting some financial institutions to give it a second look.
The data tells the story: Nearly three-quarters of U.S. banking customers pay their bills via automatic or recurring payments but only 15% use their bank’s bill payment option to do so, according to a 2023 study. The vast majority pay their bills directly through biller websites (using credit or debit card or ACH numbers). As card issuers and providers of checking accounts, banks may still derive benefit, but they miss the strategic opportunity of a fundamental customer activity.
Financial institutions looking to reexamine the role of bill payment and management in their product suites should start by challenging their assumptions: What does it truly mean to establish customer primacy — and what can they learn from the way fintechs have successfully tapped into consumers’ need to manage and pay bills?
Want more insights like these? Check out Pinwheel’s content hub: Primacy in the Digital Age
Primacy? Perhaps Not
Most financial institutions still consider direct deposit the essential marker of primacy — believing that if a customer’s paycheck hits their account, the relationship is secure. But that’s a misread of consumer priorities, argues Pinwheel CEO Kurt Lin. “When you talk to consumers, what they really care about is having their problems solved,” Lin told The Financial Brand. “And the No. 1 problem in their financial life is paying bills on time and managing their budget so that they have enough money to spend on things beyond day-to-day expenses.”
The disconnect is reflected in the metrics most financial institutions watch most closely: number of direct deposit connections, total deposit volumes, number of accounts opened. Fintechs, by contrast, optimize for whether they’re saving the customer money, increasing engagement and drawing more of the customer’s financial life into their ecosystem. Lin contends that unless primary bills — rent, mortgage, utilities, internet, insurance — are being paid from your institution, you haven’t truly earned primacy.
The cost of getting this wrong is high. Pinwheel’s research shows that nearly half of new accounts go inactive within the first year, often because customers find it too difficult to switch their deposits and recurring payments. Meanwhile, demand for smarter tools is rising fast. In a 2023 survey by Datos Insights for Mastercard’s Ethoca, 87% of U.S. consumers said they wanted their bank to offer subscription management — and half said they’d consider switching banks for it. The latter statistic may not be surprising given that the average consumer spends around $600 annually on unwanted subscriptions.
Bill Pay as Strategic Offering
In the hands of fintechs, bill payment has become a front-door strategy for customer acquisition and engagement. Platforms like Rocket Money, Chime, and Credit Karma offer bill and subscription management together to create regular touchpoints, send personalized alerts, and initiate conversations that banks often miss. These features build trust and encourage users to return, with each interaction an opportunity to reinforce value and deepen loyalty.
Such engagement unlocks something even more valuable: data. By helping customers centralize their bills — from rent and insurance to utilities and streaming services — banks can gain visibility into their full financial picture. That insight allows institutions to identify which accounts and products a customer holds elsewhere, enabling them to make meaningful, well-timed offers that could bring them in-house.”If you see they have a mortgage with another lender, you can pitch a better rate,” said Lin. “But you can only do that if you know the bill exists.”
For institutions looking to improve cross-sell and upsell performance, this level of insight can be transformative. Fintechs are already showing how it’s done, positioning bill pay and subscription management as gateway products that fuel growth in more strategic revenue drivers. Rocket Money generates mortgage leads for Rocket Mortgage. Chime and Dave use behavioral data to promote premium-priced tiers with features like early paycheck access and enhanced customer support. Robinhood taps spending and billing data to drive adoption of its high-reward credit card and integrated banking services. In each case, visibility into bill data is being used to surface the right products at the right time, while also serving each company’s larger strategic goal.
Bill Pay 2.0
So what will the bill payment offering of the future look like to the end-user?
It helps to start with a dashboard analogy: An application that gives the consumer transparency, control, and intelligent assistance. Customers want a single place to see what’s coming due, what can be optimized, and where they might be overspending. For banks and credit unions, that means moving beyond static bill pay screens — which financial institutions make hard to find in the first place — and toward dynamic bill management tools integrated directly into the banking experience.
Lin identifies six key capabilities as essential: identifying and tracking all customer bills, enabling easy switching, sending timely notifications, offering one-click cancellations, surfacing savings opportunities, and generating personalized product offers. Together, these features turn bill pay from a utility into a data-rich engagement engine that deepens relationships and drives revenue.
Such an offering might surface all bills — subscriptions, utilities, rent, insurance — classifying them by type and urgency, and even benchmarking them against market rates. It would enable real-time alerts in advance of renewals or rate hikes, support one-click cancellations, and flag bills that appear unusually high. Over time, it will build trust by solving small but persistent problems: Did you know you’re overpaying for the internet? will become the kind of proactive message that makes a bank feel essential.
More advanced versions will go further, using bill data to unlock broader financial opportunities. By centralizing a customer’s external accounts, financial institutions can identify refinance targets, suggest lower-cost alternatives, or bundle offers around mortgage, auto, or insurance products.”Notifications are the secret sauce in all of this,” Lin said. “Getting alerts to the customer at the right time fundamentally changes their relationship with their money by driving them back to your banking app to increase engagement with personalized offers.”
Crucially, this future-state bill pay offering doesn’t require banks to become fintechs overnight. But it does require them to partner, integrate, and rethink what qualifies as core. Whether through embedded SDKs, API partnerships, or white-label fintech integrations, the banks that prioritize this capability will defend against customer attrition and capture new relationships by delivering what modern consumers increasingly expect.
